European court of justice

Today the Administrative Court has ruled on the challenge brought against us by a number of members following the ECJ’s ruling in Hampshire.

We were challenged over the approach we’ve been taking to calculate increases in compensation following the Hampshire ruling, and over whether the PPF compensation cap was lawful. 

The court has ruled:

  • the PPF compensation cap is unlawful on grounds of age discrimination 
  • our approach of making a one-off calculation is permissible, but needs to make sure that over the course of their lifetime each individual, and separately each survivor, receives at least 50% on a cumulative basis of the actual value of the benefits that their scheme would have provided
  • members of schemes in assessment should receive benefits at the level required by the ECJ’s Hampshire judgment

We’re studying the detail of the judgment carefully to decide our next steps, and will work closely with the Department for Work and Pensions (DWP) to understand how the UK government will respond. 

While we do so, we’ll continue to pay our members their current level of benefits.

The government sets the level of compensation we pay, balancing the needs of members and the needs of our levy payers, so it’s for them to decide how to respond to the part of the judgment relating to the cap. 

There's been media speculation that the result of the judgment could have a knock-on effect on members whose compensation has been fixed at 90% because they hadn’t reached their normal pension age when their employer failed. The 90% measure wasn’t tested in this case although the court did comment that the impact on those affected, although significant, doesn’t render the measure inappropriate or unnecessary. Like the compensation cap, the 90% measure is set for us by DWP and the government, balancing the needs of members and the needs of levy payers.

We’ve updated our FAQs about the ECJ Hampshire judgment to reflect today’s ruling.